A certain company, who shall remain nameless, recently offered a “special dividend” of $2.10 on each common share of stock that one holds as of November 21, 2008, payable December 5, 2008.
Now why would the Owner and CEO of a company purchase 550,000 shares of his own stock on November 20th, by exercising options? This actually puts him at owning over 8.9 million shares not including 7.5 million shares in a trust fund for his children.
This means that first there is a “special” dividend, which in this company’s 50 years of existence has never done before, and previous “normal” dividends are around $0.05, is given and second the CEO and Owner, the day before the special dividend is figured buys over a half million shares in his own company, at a price that is running about $6.00 below actual cost by exercising his options. So when the dividend is figured tomorrow, he makes an extra $1.1 million just off the “special dividend” and then he can unload the stock on Monday, at face value, which will be a profit of around $2.5 - $3.0 million provided the stock doesn’t take a nose dive.
Is this legal?